Introduction to Growth Hacking
Almost every large successful internet company right now has a team dedicated to growth, but it isn’t some sacred thing limited to companies with millions of users. Since there seems to be a lot of interest (http://andrewchenblog.com/2012/05/11/how-do-i-learn-to-be-a-growth-hacker-wor… around what the process is like, hopefully this post can shed light on the situation.
So what is growth hacking? I think of it as the practice of gathering data, exploring that data, and exploiting knowledge uncovered from that data in a systematized way to directly further the business goals of your company. Its more than just a role fulfilled by one person or a team of people, its a way of thinking you can use to make sure you’re getting the most out of the work you are putting into your company. It works for small startups (we prioritize development using this framework at Lookcraft all the way up to huge companies (Facebook’s growth team has massive influence across the whole organization).
I like to think of it as a simple 5 step process that you repeat on a regular basis:
1. Determine Your Company’s Primary Goal
Because your job as a growth hacker is to directly further the business goals of your company you must first understand what the primary goal of the company is and why. This is deliberately singular because its hard to do a good job serving multiple higher level contexts. A growth hacker with multiple goals falls prey in a more subtle way to similar forces that cause most corporate homepages to be an amalgamation of the top few things each department wanted on the homepage. You must determine what the primary goal of the company is. This goal of varies widely across markets and business stages, in a startup they can often change very quickly. Example goals for a more established company are generally more around growth and might be stated like; grow top-line revenue, grow profits, or gain market share. For a startup, goals are usually based more around discovery and might be stated like; determine the value proposition and product experience that resonates best with our target market or figure out which channels allow us to scalably acquire users in a cost effective way.
2. Identify Potential Actions
The next thing you should do after you determine your goals is to identify actions that will help you accomplish them. These might be things like growing your homepage conversion rate, getting your users to log in more often, or getting a higher percentage freemium users to upgrade. These actions are specific, and their implementation should lead you closer to your goal. You should write as many of these down as you can think of.
3. Prioritize Actions by Highest Leverage
Its important to look at the actions you’ve defined and determine which ones give you the highest leverage towards achieving your goal. Generally the actions you’ve defined will effect change in some kind of conversion funnel you care about that is directly related to the goal the company is trying to achieve. Consider which of these actions give you the greatest benefit with the least effort? In other words, think about where you have the ability to improve most on a percentage basis. If your goal is to increase number of paid users using your SaaS offering and your conversion from homepage visit to email address is already at 10% you’re probably only going to be able to achieve a 1.5x-2x improvement at the most. If your homepage visit to email conversion is at 10% and your ratio of paid users to unpaid users is 1:1000, you can probably improve that ratio by 10-50x so you’d be much better focusing your effort there. For this strategy to be effective you obviously have to have a good idea for what achievable metrics are. The best way to do this tends to be just asking people who have done similar things. There is also a wealth of public data out there for things like email open rates, freemium conversion rates, and more which you would be well served to educate yourself on.
4. Identify and Prioritize Tactics
Once you prioritize the actions you want to take you should make a list of tactics for accomplishing those actions. If the action you want to take is to increase your ratio of paid:unpaid users some tactics you might try would be things like; implementing an automated email campaign for free users at certain product trigger points, running promotions for free users to try the premium version of the product, or improving messaging for premium users with expiring credit cards (reducing churn also improves your ratio). You should then go through the same process here as you did for determining actions. Look at each tactic and estimate how much effort it might take from an engineering and product perspective versus the estimated perceived benefit, cut and/or implement features accordingly. There is also a large educational component here. Its hard to prioritize effectively if you don’t have a good understanding of the tactics that are available to you and their estimated effects. Again, I would suggest asking around here (Andy Johns from Quora and previously Twitter and Facebook gives an excellent starting point on this Quora thread), but this is really something that you tend to learn through a lot of trial and error, and tactic effectiveness can also vary widely from product to product.
Its a trial and error process, so launch and iterate. Good luck!